High above State Street in Downtown Madison, with the city’s four lakes encircling a penthouse view, a group of 20 or so health technology executives recently launched an effort to highlight the city’s role in creating solutions for healthcare’s future.
Madison has long been a home for innovative healthcare, whether in the form of care delivery models (Our Health Management Organizations, or HMO, system is a precursor to the growing Accountable Care Organization, or ACO, model), breakthrough UW-Madison research in stem cells and Vitamin D discoveries, or the founding of Epic, the market-leading electronic health records company. These past successes have led to the founding of a new crop of health tech companies, many represented in the room during the launch of the new effort.
“We believe in this sector, the business community believes in this sector,” said Zach Brandon, president of Greater Madison Chamber of Commerce and a leader of the re-formulated Madison Health Tech Capitol group. “We have a unique opportunity and it’s a unique time for Madison.”
Joining Brandon in unveiling the new group was Madison Health Tech Advisory Board Chair Mark Bakken, managing partner of HealthX Ventures, and another board member Jonathan Baran, CEO of healthfinch, a Madison-based technology company that builds software that helps automate routine, repeatable tasks for physicians. Both entrepreneurs agreed with Brandon, and said the city has the right ingredients to help support fast-growing companies.
One element of support is capital, which seems to be increasingly finding its way to early-stage companies based in the Wisconsin capital city. Just earlier that day, a Chicago venture capital firm had spent the day driving up for a day of meetings, a circumstance often seen with top firms recently flying in from North Carolina, Austin and Silicon Valley.
Just a decade ago, few nationally knew of Madison’s role in the healthcare sector. Then a few years ago everyone in healthcare knew of Epic’s massive themed campus in the farm fields 11 miles outside of town. But now there’s also a growing industry awareness of early-stage companies like healthfinch, Nordic, Forward Health Group and Redox.
At early-stage venture capital fund HealthX, Madison (and Wisconsin) have been an abundant source of the firm’s deal flow. Redox, the fund’s first portfolio company, was founded in Madison (by a group of former Epic employees) and went on to raise a round of funding that included financial firms from New York and Boston. Both firms recognized the value in Madison.
“We had a top VC encourage us to move to the Valley to be closer to their network,” recalled Niko Skievaski, a co-founder of Redox and a former Epic employee, referring to the famed Silicon Valley in the San Francisco Bay Area. “But despite the opportunity to work with a great financial partner, we still see the talent network in Madison for building a health tech company as second to nowhere.”
Several other recent local healthcare deals attracted outside capital, and not small amounts. Chicago’s Adams Street Partners, which describes itself as one of the oldest and largest managers of private equity investments in the world, recently led a healthfinch investment round. Investors in Nordic, started in 2010, included the venture arm of Kaiser Permanente (largest U.S. managed care organization), along with several New York-based top-tier VC firms. Forward Health Group, a population health management company, recently closed a round from a healthcare-focused Minneapolis fund. Propeller Health counts among its investors a Silicon Valley-based firm founded by an early Facebook employee who’s an owner of the NBA’s Golden State Warriors.
At the end of last year, roughly 15% of the 150 companies HealthX reviewed were based in Wisconsin. Although the fund can invest anywhere, and has deals in the works in San Francisco and New York, it is also working with two additional companies in Madison.
“The convergence of expertise in computer sciences, biotechnology and healthcare has led top investors in innovation to perk up and take notice,” said Bakken. “We want to tell the story of how new ideas can grow and prosper in Madison.”
To learn more about the Madison Health Tech group and to join its efforts in growing the Madison economy, go to: healthtechcapitol.com
Dan Blake is a partner at HealthX Ventures. He also spent a number of years as a reporter at the Chicago Tribune and an implementer at Epic.